Published on: January 30, 2020


Consumers are feeling better about the housing market, and the housing market appears to be feeling better about itself.

Fannie Mae’s Home Purchase Sentiment Index (HPSI) remained near an all-time high in December, propelled by a 16 percent year-over-year increase in the number of respondents declaring this a good time to buy a home. Sellers are also upbeat. “Good time to sell” responses increased by 7 points in this survey.

“The continued strength in the HPSI attests to the intention of [consumers] to purchase homes,” Doug Duncan, Fannie Mae’s chief economist, said in a press statement. The index readings, he added, “support our predictions of a healthy housing market [this year], as well as consumers’ appetite and ability to absorb the expected increase in entry-level inventory.”

After falling a little in November compared with the prior month, existing home sales rebounded smartly in December, beating the November pace by 3.6 percent. The adjusted annual rate of 5.54 million units sold was almost 11 percent above the year-ago total, according to the National Association of Realtors (NAR).

Although the strong economy and sustained employment gains will support buyer demand going forward, inventory anemic inventories (about 8.5 percent lower than they were a year ago) remain a concern, Lawrence Yun, the NAR’s chief economist noted, especially for first-time buyers facing an acute shortage of affordable homes in their price range.


Employers added 145,000 jobs in December, a bit below projections, but well above the 100,000 per month average economists say is required to keep pace with population growth. Wages grew more slowly (2.9 percent vs. a 3.1 percent annual rate in November), but inflation remained subdued, keeping consumers’ purchasing power intact.

Although consumer confidence and consumer spending remain strong, corporate executives are skittish about the economic outlook. A majority of the CEOs responding to a recent survey by Deloitte expect the economy to slow this year, and many see a recession as a significant and growing risk.

The labor market and the pace of economic growth would seem to support a more upbeat view, but the uncertain political climate and concerns about the ongoing trade war with China weigh heavily on the minds of many executives.

“Business leaders are like normal people,” Bart van Ark, chief economist at the Conference Board, told the Wall Street Journal. “As long as we don’t have any guidance about where [things] are likely to go next, it’s very had to make big investments. I don’t think the stress [executives are feeling] is going to go away.”

Even if those economic jitters aren’t justified, they could nonetheless have an impact. “One real risk of this recession mindset,” the Conference Board warns in a recent report, “is that it can become a self-fulfilling prophesy.”


Ransomware attacks are becoming more sophisticated, more dangerous and more expensive. Although the number of attacks declined by 6 percent last year, the average ransom paid in the third quarter, $41,198, was more than triple the average for the first quarter, according to Coveware, a company that negotiates payments for targeted companies.

Cyber thieves are not only demanding larger ransoms, they are also less likely to scale their demands to the size of their victims, recent studies have found. “You’d expect a ransomware demand that you can pay,” Kelly Castriotta, an executive with Allianz SE North America, told Insurance Journal. But thieves are increasingly targeting mid-sized companies that both lack sophisticated defense mechanisms and have fewer resources to pay ransom demands, he noted.

Recent cyber-attacks have paralyzed Travelex Ltd. and the Albany County Airport Authority, among others. The airport paid nearly $100,000 in Bitcoin to unlock its systems; Travelex officials have refused to comment on how that company responded to a $6 million ransom demand.

Insurers are still covering ransomware losses, but they are beginning to insist that companies do more to protect themselves from the attacks, the Insurance Journal reported. Insurers are also charging more for the coverage, with some companies reportedly increasing premiums by as much as 25 percent, the publication noted.

Corporate executives, meanwhile, are becoming more aware of the risks posed by cyber incidents, which topped the list of global business risks for the first time in a recent poll. Business interruption, the perennial lealer, slipped to second.


The physical damage caused by climate change – highlighted by the recent bush fires that have scorched Australia – have been documented. Less apparent, but equally threatening, is the financial damage climate change may cause. A recent report by the Bank for International Settlements warns that climate change “poses unprecedented challenges to human societies, and our community of central banks and supervisors cannot consider itself immune to the risks ahead of us.

After spending most of the last decade helping economies recover from the worldwide effects of the Great Recession, the report notes, Central Banks may spend the next 10 years “coping with the disruptive effects of climate change and technology.”

According to some estimates, climate related damage could reduce global GDP by as much as 25 percent. In a worst case, the report suggests, Central Banks may have to step in as “climate rescuers of last resort or as some sort of collective insurer for climate damages.”

“Climate change is a global problem that demands a global solution,” the report says, and coping with it will require a sustained, coordinated effort by the world’s central banks. Whether the banks will be capable of mounting that effort isn’t clear, however, the report acknowledges, noting: “Monetary policy seems, currently, to be difficult to coordinate between countries.”


The Labor Department is scaling back rules that would have ensnared more companies in the dual employer net and increased their potential liability for employee compensation claims. The revised rule, slated to take effect in March, would apply to disputes over wages and overtime, but would not apply to discrimination and unfair employment practices claims.

The central question in the dispute triggering the revisions was whether a national brand could be liable for a complaint against one of its franchisees. But the revised rule will apply more broadly to employers of all kinds, including condominium management companies and community associations, which could become entangled in dual employer claims.

Under the new rule, the assessment of whether dual employer status applies will focus on whether the employer has and exercises the power to:

  • Hire or fire the employee.
  • Supervise and control the employee’s work schedule or conditions.
  • Determine the employee’s pay rate and method of payment.
  • Maintain the worker’s employment records.

A DOL statement announcing the rule emphasized that meeting only one of these factors would not trigger dual employer status.

The new rule “give[s] greater clarity to businesses [that] want to work together, [thereby promoting] an entrepreneurial culture that has driven American prosperity for decades,” Labor Secretary Eugene Scalia said.

A trade association representing franchise companies applauded the rule but an advocacy group for employees has threatened to challenge it.


In the race between home prices and incomes, home prices are winning. The median price of a home sold in 2017 was 4.2 times greater than the median household income that year, a near record price-to-income disparity, according to the Harvard Joint Center for Housing Studies’ 2017 “State of the Nation’s Housing” report.

America’s vaunted mobile society is becoming decidedly less mobile. Only 9.8 percent of Americans moved last year – the smallest percentage since analysts began tracking this data in 1947.

Student loan debt is growing more slowly, but the rate at which consumers are repaying these loans has also slowed.

Businesses have lost their appetite for global investment – evidence that the globalization trend has “decelerated,” according to a United Nations report. The report cites the trade war between China and the United States and the threat that more countries will begin imposing tariffs as major factors behind the reversal.

Some economists are speculating about when the next recession will begin, but others are suggesting that at least in some areas of the country, the last recession never ended.



Home owner associations have broad authority to regulate new construction and design modifications in their communities, but the review process must be transparent, reasonable and fair. The Property Owners Association (POA) in this North Carolina case (Duff v. The Sanctuary at Lake Wylie Property Owners Association, Inc. ) didn’t meet those standards.

The plaintiffs, John and Olga Duff, and Olga’s Parents, Jose and Juliana Calderon, purchased adjoining lots in Sanctuary, a residential community governed by the Lake Wylie Property Owners Association.

The declaration authorized the association to establish design guidelines and to create an Architectural Control Committee to enforce them. Complying with the review procedures, the Duffs submitted their plans for the construction of homes on the two sites. Their builder was on a list of contractors approved by the POA and the design of the homes, the Duffs said, was “consistent with the design” of other homes in the community.

The ACC didn’t agree, finding that the Duffs’ plans “did not meet the requirements of [the design guidelines] for architectural detail and materials.”

The Duffs revised their plans, but the ACC rejected them again, complaining that the designs for the homes “do little to separate [them] from hundreds of similar homes [in the community]. There is nothing that says ‘custom’ or ‘luxury’ about the plans you submitted,” the committee complained.

The ACC chair met with the Duffs and their builder and suggested some specific design changes that, he suggested, would address the committee’s concerns. The Duffs incorporated those changes and resubmitted their plans. The POA’s architect reviewed the plans and made some additional suggestions, which the Duffs incorporated in a fourth set of plans. Although the architect told the ACC that he thought the plans “met the objective requirements of the [design] guidelines,” the ACC rejected them anyway, saying that the plans “did not conform to the desired architectural aesthetic,” and noting that the committee “would prefer new plans.”

The Duffs appealed to the POA’s governing board, which upheld the ACC’s decision, at which point the Duffs sued the POA, alleging fraud, breach of fiduciary duty, negligent representation and unfair and deceptive acts and practices. They asked to court to issue a declaratory judgment requiring the POA to approve their design plans and to award punitive damages for the ACC’s failure to act in good faith.

The trial judge dismissed the unfair and deceptive acts (UDAC) and breach of fiduciary duty claims, after which a jury awarded the Duffs $1,700 on their fraud claim, $197,041.62 for ‘negligent representation” and $67,787 in punitive damages. The judge reduced the fraud award to $1 but refused to reconsider the other two claims. The judge also issued the directed verdict the Duffs had requested, ordering he ACC to approve the third set of plans they had submitted.

Both parties appealed. The Appeals Court rejected the Duffs argument that the trial court should not have dismissed the UDAC and breach of fiduciary duty claims, but upheld the other components of the decision favoring the Duffs, which the POA had appealed.

The POA argued that the trial judge should have dismissed the fraud claim entirely, not simply reduced the damages related to it. But the Appeals Court found that the evidence supported the conclusion that the ACC chairman’s comments “were reasonably calculated to mislead [the plaintiffs] and did mislead them.” Specifically, the court noted that the chair of the ACC “conveyed to plaintiffs the benefit of submitting plans for a formal review as they would receive recommendations and comments [by the POA’s architect] to help them get approved. The plaintiffs relied on those statements, the court noted, and “fully expected to gain approval” of the revised plans they submitted.

“Notwithstanding the representations” made by the ACC and its chairman, the court noted, the POA’s architect never conducted a full review of their plans. The Duffs, as a result, “were unable to determine what was necessary for compliance” with the design guidelines, and were unable to build on the lots they had purchased,” although they continued to pay HOA dues and assessment fees throughout the review process.

“A jury could reasonably infer from the evidence that plaintiffs’ reliance was reasonable under the circumstances,” the court found. “Thus, based on the misrepresentations upon which plaintiffs relied in submitting their third set of proposed plans for formal review, we find that plaintiffs’ evidence in support of their fraud claim was sufficient to present to the jury.”

The Appeals Court also rejected the POA’s contention that the trial court erred by issuing a directed verdict requiring approval of the Duffs’ building plans. The association argued that the Declaratory Judgment Act “does not provide for either the jury or the [trial] court to sit as a super-Architectural Control Committee,” substituting their judgment for that of the association’s ACC.

But the jury found evidence that the ACC “did not act reasonably and in good faith,” the court noted. And because of those “unreasonable actions,” upheld by the POA, the Duffs “were wrongfully prevented from building their homes.”

A restrictive covenant in the community’s governing documents authorizes the ACC to review and approve building plans, the court agreed. But it cited prior decisions holding that a restrictive covenant of this kind is enforceable “only if the exercise of the power in a particular case is reasonable and in good faith.” Because the POA in this case “acted in bad faith and abused its position of power by denying plaintiffs’’ plans,” the court ruled, “the restrictive covenant is unenforceable.”


“There are certain general things we’re certain about, but the shape and content of the future is not one of them. We get the future we build for ourselves.” ─ Billy Fleming, director of the University of Pennsylvania’s McHarg Center for Urbanism and Ecology, discussing the challenges posed by climate change.

Marcus, Errico, Emmer & Brooks specializes in condo law, representing clients in Massachusetts, Rhode Island and New Hampshire.